A key reason for the yellow vest protests was that poorer households would have been proportionally more impacted by the proposed fuel tax increases. Carbon taxes are generally regressive, i.e. impose proportionally higher costs on poorer households.

If the policy objective was indeed to tax carbon fuels to discourage their use the French government could have proposed a carbon fee-and-dividend, i.e. a carbon fee that would be distributed equally to all citizens. This policy results in progressive outcomes, i.e. the costs of the policy would have primarily been imposed on richer households. It would have had the same effect on carbon fuel consumption, but at the same time it would have made the yellow vest protesters better off financially.

This 2020 paper suggests that the implications of a cap-and-dividend policy were largely unknown to the French public, i.e. it was perceived as regressive just like the fuel tax increase. But I doubt that the French government was unaware of the implications of a carbon fee-and-dividend, which are widely studied and proven.

Are there any indications that the French government considered, but ultimately discarded, this policy option?

  • @sba222 you should rephrase the question along the line of "what are the pro and cons of such a fee-and-dividend policy" – Gwen Feb 11 at 9:02
  • Thanks for the comments; I've edited the question to focus it on whether there were indications that such a policy was considered. – sba222 Feb 11 at 9:40
  • I don't remember it being discussed widely in French media. I'm sure that it was in some government report or other, but I don't see why the government would have considered it seriously. In France, uniform redistribution is a fringe left-wing idea. It's not something the current center-right (or ultraliberal, depending on who you ask) government would want to do even if it was popular. Besides, French people would not believe that all the revenue from the tax would be redistributed (sure, it might start that way, but in a year or two they'll start taking that money for something else). – Gilles 'SO- stop being evil' Feb 15 at 23:55

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